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www.contrast.at
Datum:
Präsentation:
Strateški kontroling – Misija kontrolinga u vrijeme ekonomske krize
05. Studenog 2013
Denis Petrović, Mag. oec. ,MBA
Verteiler:
CONTROLLER_KONGRESS_ZAGREB_DPE.pptxCONTROLLER_KONGRESS_ZAGREB_DPE.pptxCONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Contrast‘s origins date back to 1980, when the first “Controller Day” took place at the public Vienna University of Economics and Business (WU).
History
1 21980 1982 1991
Research▲ The 1st “Controller Day“ is
organised at Vienna University of Economics and Business (WU)
▲ Main objective: “…to contribute to the development of management control and strategic management in both science and practice”
Education▲ Controller Institut founded
as a non-profit-society▲ Objective: “…to offer
excellence education and research in the areas of:
● Management Control● Finance● Management“
Management-Consulting▲ Establishment of consulting
business with primary focus on strategy and management control
▲ Objective: “…to offer top-tier management- consulting in addition to high-quality education activities.“
3
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Today the organisation benefits greatly from its strong interrelations between management consulting, education and research.
Today
Research▲ Several research studies
are conducted in cooperation with Contrast
▲ New research findings from WU are integrated in course offerings of the Controller Institut
Education▲ New educational products,
such as business simulation games for managers, are developed in cooperation with Contrast
▲ Programmes offered together with WU, such as the MBA in Controlling
Management-Consulting▲ CEO of Contrast is Head of
the Institute for Strategic Management at WU
▲ Contrast Consultants share their practical experience in seminars and courses of the Controller Institut
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Controlling according to IGC What does this mean
Controlling is a management activity that makes sure that companies reach their objectives.
As partners of management Controllers make a significant contribution to the sustainable success of the organization.
Controllers …▲ design and accompany the management
process of defining goals, planning and reviewing so that every decision maker can act in accordance with agreed objectives
▲ ensure that decision makers act with foresight and thus make it possible to take advantage of opportunities and manage risks.
▲ integrate an organization's plans into a cohesive whole
▲ ensure the quality of data and provide decision-relevant information.
▲ are an organizations economic conscience and thus committed to ensuring its success
Details:
http://www.igc-controlling.org/EN/_leitbild/leitbild.php
▲ Controller believe that clear and accepted objectives are at the core of management. By ensuring the definition of these objectives the controller substantially contributes to successful management.
▲ Controllers take care of planning and reporting.▲ The Controller has to use all his resources to
support management in achieving their objectives. The resources include financial know-how, fast and flexible information as well as constant reviews and checking. The sophisticated controller calls this sparring or consulting.
▲ To be efficient, the Controller needs to have his systems under control. This takes up a lot of her time.
▲ By strictly administering management processes, the Controller forces the company into a regular review cycle, thus making sure that problems and opportunities are being identified early on.
Definition of Controlling
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Recent developments influence the role of the CFO
Übersicht & zentrale Ergebnisse der Studie
▲ Financial crisis and high insecurity of the economic environement
▲ The challenges become more and more diverse and interdisciplinary
▲ Next to data integration, compliance and financing, including the CFO in strategy development becomes more and more important
▲ Time of crisis strenghten the position of the CFO
▲ The role of the CFO devlops towards the real strategist behind the board’s plans
▲ The CFO becomes challenger and sparring partner for management, also for strategic issues
Motivation for the Study
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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▲ How is Controlling organized?
▲ What makes Controlling efficient?
▲ What are the dominant tasks?
▲ What are the key benchmarks?
▲ Which instruments does the Controller use?
Übersicht & zentrale Ergebnisse der Studie
The study has targeted the Controllers of the top 500 companies in Austria and the Czech Republic
Framework and Key Questions
Key Questions Framework
▲ Online - Questionaire● Top 500+ in Austria● Top 500+ in Czech Republic● Total ca. 1.500 companies
▲ Response rate 11,8%
▲ Range● Sales 100 m - 40 bn● Employees 60 - 30.000
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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▲ What are the key challenges?
▲ What is the State of the Art of the CFO function?
▲ What are the dominant CFO-Roles?
▲ How does the CFO contribute to strategy?
▲ Which instruments does the CFO use, when working on strategy?
Übersicht & zentrale Ergebnisse der Studie
The study has targeted the CFOs of the top 500 companies in Austria
Framework and Key Questions
Key Questions Framework
▲ 2-step procedure● quantitative research● personal interviews
▲ Online-Questionaire of the Top-500+
▲ Response rate 21,8%
▲ Industries● Industry 54%● Retail 35%● Services11%
▲ Range● Sales 100 m – 40 bn● Employees 60 - 30.000
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Controlling depends on a close interaction of manager and controller. The only thing that counts is the next decision = the future!
Controlling is Interaction
▲ Manager• Has enough to
do to keep the car on theroad
• Needs fast and precise information
• No distractions, no nonsense
• Pushes forward and wants to win
▲ Controller• Is part of the
team• Is only
successful, when the team wins
• Needs to really understand the driver
• Looks forward and wants to win
▲ Controlling• Is seamless interaction to bring the car (company) forward• has no time to look back• Is the combination of different talents
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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n=241-264
Controlling has challenges in many areas. MIP, opportunities/risk control and performance increase are among them.
present vs future priorities
Mediane
▲ look-out
▲ present▲ future
▲ Controlling has the following priorities
▲ operational planning / budgeting▲ forecast
▲ analysis and reporting (internal)▲ strategic controlling
▲ MIP▲ cost accounting
▲ data management▲ analysis and reporting (external)
▲ project and investment control▲ opportunity and risk control
▲ internal consulting▲ functional controlling (sales, HR)
▲ control of measures▲ development of processes and systems
▲ special projects
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Quelle: Ruthner, R./Feichter, A.: „Der CFO als Strategic Performance Manager“. In: CFOaktuell Sonderheft, 7. Jahrgang, März 2013.
Übersicht & zentrale Ergebnisse der Studie
The key challenges lie in risk management, financing and strategic controlling
Challenges from the pespective of the CFO
accounting 11/4/13
financial accounting 11/4/13
procurement 11/4/13
internal audit
planning/budgeting 11/4/13
ICS 11/4/13
11/4/13 11/4/13
strategic control 11/4/13
treasury/financing 11/4/13
risk management 11/4/13
projects and investments 11/4/13
functional controlling 11/4/13
11/4/13 11/4/13
HR 11/4/13
11/4/13 11/4/13
taxes 11/4/13
11/4/13
consolidation 11/4/13
11/4/1311/4/13
Top-3-Challengesof the CFO
risk management is well established, but lacks a relation to other systems
optimizing the financial mix is an essential part of treasury
strategy gains in importance, but needs more sophisticated instruments
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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The role of the CFO can be described in three characteristics
Übersicht & zentrale Ergebnisse der Studie
integrated control
▲ The CFO ensures an integrated control system …
– financial and non-financial levers of control (KPIs)
– on all relevant corporate levels
– broad employment (decision support, reporting and incentives)
▲ managing volatility of results
financial excellence
▲ The CFO ensures efficient structures, processes and systems …
– state-of-the art finance organization and processes
– information and integration standards
– automatization of data analysis
▲ Devising and implementing a master plan for finance and controlling
Dimensions of the CFO role
service & sparring
▲ The CFO acts as a service and sparring partner to management (= business partner)
– support to profit centers and business units
– personal relation to decision makers
– adapting organization structure (close to the customer)
▲ establishing relevant communication platforms and tools
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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The "Strategic Performance Manager" is an ideal vision for the corporate CFO
Finance Manager
Strategic Performance
Manager
Performance Manager
Business Partner
Übersicht & zentrale Ergebnisse der Studie
Exzellence in structures, processes & systems in finance
Quelle: Ruthner, R./Feichter, A.: „Der CFO als Strategic Performance Manager“. In: CFOaktuell Sonderheft, 7. Jahrgang, März 2013.
Seperating CFO Roles
integrated control system for strategy and operations
financial excellence
Role Focus requirements
accepted service- & sparringpartner for management
financial excellence
controlling the implementation of strategy through an integrated control system
financial excellenceintegrated control,service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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In Austrian companies the role of the "Strategic Performance Manager" is dominating
Roles of the Austrian CFOs
Finance Manager (1%) Performance Manager (13%) Business Partner (33%)
High rates in the areas of financial excellence, integrated control systems, service & sparring
„Stuck-in-the-middle“ (11%)
Quelle: Ruthner, R./Feichter, A.: „Der CFO als Strategic Performance Manager“. In: CFOaktuell Sonderheft, 7. Jahrgang, März 2013.
Strategic Performance Manager (41%)
financial excellence
▲ integrated control
service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
financial excellence
integrated control
service & sparring
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 16|Entwicklungsstand des Strategic Performance Managements
Realising a Strategic Performance Management System involves many interwoven activities
Elements of Strategic Performance Management
acti
viti
es
• Clear and accepted strategy linked to
• a strategic financial goal.• Incentive systems linked to
strategy, • integrated management
processes• fit of organizational
structure and strategy
developing objectives from a strategic and financial goal system
devising and priorising project-/ and program portfolios to implement strategies
mid-term planning linked to strategy as the basis for operational budgets
setting up a clear and precise reporting to support implementing strategies
logical, strategic value drivers for a flexible planning and simulation model
controlling volatilities (risks)
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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In-between Strategy and operative Controlling
Big pictures
Organization
Budgeting
Strategy-focused middle-term-planning
Project-/Program portfolio-management
Integrated strategic and financial goal-system
Risk-m
anagement
Dyn
amic
sim
ulat
ion
mod
els
Vision
Strategy and strategic/financial objective
Managem
ent processes
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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CFOs of Austrian companies more and more become "Strategic Performance Managers" – financial excellence is an important basis for this development
Zusammenfassung & Handlungsempfehlungen
▲ The CFO is challenger & sparring partner of management and is an important player in corporate strategy
▲ The role of the CFO as a Strategic Performance Managers (41%) dominates in Austrian companies
▲ Financial excellence is an important condition for development in the dimensions integrated control and service & sparring
▲ In Strategic Performance Management more work is needed to ensure a forceful implementation of strategies
▲ The contributions of the CFO to corporate success are considerable and will increase in the future
CFO-Study 2012 „The CFO as Strategic Performance Manager“
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Schools of strategic management
Theory
External:Industry attractiveness
Market-based view
Advantageous positioning in the competitive
environment
Michael Porter
Stakeholder-based view
Internal & external:Stakeholder relationship
Unique stakeholder relationships
Jeffrey H. Dyer/ Harbir Singh
Resource-based view
Internal:Availability of resources
Better availability of scarce resources and core
competencies
Gary Hamel/C. K. PrahaladJay Barney
Competitive advantage
Focus
Most eminent authors
80 90 2000
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Generation of strategic
option
Strategy communication and
cultural change
Cycle of value-based management
Changes
Analysis
Strategy check
On-going value management
Strategy specification
Adaptation of structures,
systems and processes
Assessment and selection
of options
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Four dimensions of strategic analysis and strategy conception
Strategic analysis
Financial performance / value creation
Processes / activities and company organization
Customer / market
Resources and potentials
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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The strategic analysis‘ objective is to derive a basis for decision-making in order to develop a proper strategy.
Strategic analysis
Definition of the own business
● What is our mission?
● Who is our customer?
● What does the customer want?
● What are our results?
● What is our plan?
Environment / industry
▲ Environment analysis▲ Stakeholder analysis▲ When needed: Industry
analysis▲ When needed: Market analysis
(quantitative)
Organization
▲ Organization analysis▲ Potential analysis
Strengths & weaknesses, core competencies
Opportunities & threats, Key success factors
Sharpening: „Where is our organization at?“
▲ Contractual fundamentals
▲ Mission statement (mission, vision, values)
Determining factors
Basics for strategy development
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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During strategy development, special attention has to be paid to the internal and external analysis.
Strategic analysis
Organization analysis
Potential analysis
▲ Analysis of core competencies▲ Cost-structure analysis▲ Analysis of strategic business fields
▲ Derivation of potentials for improvement which can later on be integrated in the target plan.
Environment- / industry analysis
Stakeholder analysis
▲ General trends in society, technology, economy, etc.▲ Analysis of the industry‘s dynamics ▲ Methodology: STEP-analysis, Porter‘s 5 Forces
▲ Organizations / persons, that (may) influence the company▲ Internal and external▲ Methodology: Structured interviews with central stakeholders
INTERNAL
EXTERNAL
Market analysis
▲ Quantitative market analysis with selected analysis tools
Opportunities, threats
Strengths, weaknesses
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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From the analysis to the generation of strategic options
Step by step
External analysis Internal analysis
Strategic options
▲ Future of the industry▲ Opportunities / threats▲ Key success factors
▲ Resources▲ Strengths / weaknesses▲ Strategic resources
▲ Concentration on strengths that are at the same time key success factors
▲ Minimizing “deadly” weaknesses▲ Using opportunities consequently ▲ Counterbalance risks
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Dimensions of strategy evaluation
Think twice
Strategy evaluation
qualitative quantitative
Internalpracticability
▲ Capabilities▲ Resources▲ Acceptance
Coherence
▲ Internal „fit“▲ External „fit“
Risk PIMS SVAReal
options
Middleterm
planning
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Middle-term planning
Operationalization of Strategy
▲ Inclusion of external benchmarks
▲ Documentation of planning premises
▲ Avoidance of a „Hockey-Stick“-planning
▲ Performance budget, P&L-account, investment plan, CF-statement, planned balance sheet ▲ Time horizon: 3-5 years▲ Scenario-planning▲ Highly aggregated planning▲ Concentration on key-figures▲ Translation of strategies into a middle-term measure-program
Middle-term planning
Strategic optionsTranslation of developmentscenarios into strategic objectives and rough measures
Trend objectives for middle-term planning, open
time horizon
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Realization of strategies
Measurement parameters
Measures
Controlling of measures
e.g. customer-satisfaction
e.g. conceptualising and implementing complaint management
e.g. concept for a complaint-management exists
Strategic objectives
e.g. develop clear communication structures towards customers
Measures the extent of goal attainment
Identifies whether the single measure has been reached
Contribute to a better goal attainment
In order to reach strategic objectives, relevant measures have to be defined. Through measurement parameters goal attainment can be determined.
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Operationalization of strategies
Big picture
Reasons for the failure of strategies
▲ No sufficient specification of the vision or the strategy
▲ No link between strategy and resource allocation
▲ No link between strategy and targets of departments, teams and employees.
Starting situation
▲ Defined strategies at corporate-, BU-, and department-level.
▲ Availability of results regarding the qualitative and quantitative strategy evaluation (incl. premises)
▲ Availability of rough strategic measures
To Do’s during strategy specification
▲ Derivation of strategic sub goals▲ Make the implementation of strategic (sub-)
goals measurable ▲ Agreement on plan-targets for departments,
teams and employees ▲ Development of a detailed
measure-program for goal attainment ▲ Allocation of strategic budgets and
employee resources for implementation of measures
▲ Coordination of sub goals, plan-targets and measures between business units
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Development of strategic options: Approaches
Options
Step 1: Development of ideas and starting points
Analytical approach Creative approach
Step 2: Consolidation to consistent strategic options
Objective:With the help of instruments, theoretical development possibilities are developed in an analytical process
Sample instruments:▲ Business model (Strategy Map)▲ Product/market-matrix▲ Industry value chain modell
Objective:Through creative exercises thinking barriers are breached.
Sample instruments:▲ Convention Hunting▲ Wear a different hat▲ What-if Process
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Central value-creation-opportunities
Tools
▲ Portfolio correction● Withdrawal from regional markets● Withdrawal from business areas or customer
segments▲ Withdrawal from certain value chain stages▲ Reengineering/cost management in central
processes
▲ Growth in the core business▲ Approach new customers▲ Growth in market share through acquisition of
competitors▲ Opening up new regional markets▲ Increasing the degree of integration▲ Development of new business areas with existing
core competencies ▲ Internal vs. external growth
Growth (examples)
Derivation of central value creating possibilities for the company
Re-dimensioning and re-engineering (examples)
Analysis results Supporting instruments
Contrast business model databank
ContrastStrategy
Creating Set
Environment, industry
Company Business area
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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From strategy to action
Operationalization of the strategyBusiness model-based strategy
“24-hour-service hotline”
Action programVision/ Strategy
PerspectiveKey success factors
Measurementparameters
Planned values
How can they be
measured?
Which value is intended?
How can it be
achieved?
What are the key success factors?
Financial performance/
accretion
Customer / market
Processes and structure /
organization
Resources and potentials
Top 3 position in the premium
segment
Outstanding growth
Customer satisfaction
Growth in market share
Customer Satisfaction Index
(CSI)
3 %
CSI 80 %
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 33|
Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Industry-related reasons Internal „technical“ reasons
Why Shareholder-Value-concepts?
▲ Increasing pressure from the capital market▲ Competitiveness necessary not only in the
product market but also in the capital market
▲ Globalisation and internationalisation of capital markets
▲ Traditional profit ratios barely correlate with the development of the market value
▲ Imperfection of the middle-term planning– Limited planning horizon– Lack of consideration of risk aspects– No consideration of the time value of
payment flows– Distortion at investing in intangible
assets– Wrong incentives for management
(problem of underinvestment)
What it has changed?
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 35|
Balance sheet vs. value orientation
Long-term approach
„There is no profit unless you earn the cost of capital“ (Peter Drucker, 1954)
Traditional accounting Value-based-approach
0Retu
rn
Loss
Value creationProfit
Costs of capitalValue destruction
Hurdle-rate
Risk-weighted required rate of return
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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The Shareholder Value Approach
The long-term approch
Capital budgeting, company evaluation
Capital markettheory
Strategy planning
SVA
Fundamentals of the Shareholder Value Approach
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Initial situation I
▲ Insufficient specification of strategic objectives and strategies▲ Missing quantification of strategic objectives and strategies▲ Performance Measurement is only concentrated on operative financial indicators▲ Market-based and financial planning- and management systems are not sufficiently integrated ▲ Measures in order to optimize market performance and financial performance are not
sufficiently coordinated ▲ Profound understanding of value- and cost-drivers is often missing in the management team
Linking financial and strategic values
„Strategy world“ and „financial world“ often co-exist and are most of the time not linked systematically
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Initial situation II
Linking financial and strategic values
The degree of financial penetration of strategic decisions is too low.
Influence on substancial
financial performance
Level of action
Strategic positioning /
business model
Business area strategy
Operation
Degree of financial penetration
Extent and level of detail of quantification
Actual
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Challenges I
▲ Specification and quantification of strategic objectives and strategies
▲ Supplementation of performance-measurement through strategic pre-control measures
▲ Integration of market- and financial-based planning and controlling systems
▲ Missionizing the company for financial performance targets
Linking financial and strategic values
Contentual business planning and business controlling as well as financial planning and financial controlling have to be systematically linked between all levels of action.
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Challenges II
Overcoming the dichotomy of the planning and management pyramid
strategic management control
operative management control
Departmentstrategy
Business areastrategy
Quantification of strategy (DCF)
MissionVision
Companystrategy
Middle-term planning
Yearly budget
Rolling forecasts
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Goal: Integrated strategic and financial planning and controlling pyramid
Companystrategy
Contentualvision
Business areastrategy
Allocation of resources
Departmentstrategy
Usage of available resources (measures)
Accretion-potential (NPV, option value)
Financial performance
vision
Planned valueadded by BUs
Value generation
Planned valueadded by departments
Operative performance Liquidity
Investment Financing-structure
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 42|
Financial Leadership
▲ Fields of action for goal attainment
▲ Controlling of measures▲ Financial and strategy-based success
control
Strategy▲ Creation and defence of
competitive advantages▲ Objectives with regard to
● Business portfolio (what?)● Area (where?)● Business model (how?)● Market position (product/
market performance)
Corporate Finance▲ Creation of economic value▲ Objectives with regard to
● Company value● Economic value added/
company profitability● Capital market performance (TSR)● Cost of capital● Capital productivity/
capital expenditure (CAPEX)
Financial Leadership links strategy with corporate finance!
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 43|
What distinguishes Financial Leadership as a management-approach?
▲ CEO-centric
▲ Role models and vision as prevalent guidance
▲ „Pre-management“ via leadership style as well as corporate culture (mind-sets, values)
▲ Alignment of all managers to the contentual goals of corporate development
Conventional management approaches
▲ Underlining the importance of the whole management team
▲ Emphasising the necessity of strategic objective-systems as well as integrated planning- and management-processes
▲ Completition through a set of strategy-based performance-indicators (financial and non-financial)
▲ Alignment of all managers to financial performance targets and creating awareness for value- and cost-drivers
Financial Leadership
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Quality characteristics of a strategy-based financial corporate management
▲ Ensure compatibility of strategic goals with financial performance goals▲ Essential management processes have to be „financially sharpened“ (especially
strategy planning, investment decisions)▲ Strategic awareness: Consideration of the impact of all substantial decisions on the
company‘s strategic position as well as on strategy execution▲ Breaking down strategic goals and strategies into detailed goals regarding
resources / organizational capabilities, processes, market performance and financial performance
▲ Financial controlling of strategy execution▲ Compatibility of management incentive systems with the company‘s objectives
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 45|
Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 46|
Genuine tasks of strategic controlling
▲ Strategy evaluation– qualitative– quantitative
▲ Strategy implementation: Linking of strategy and operations– Measurement plans and budgeting– Balanced Scorecard– Strategy-based incentive systems
▲ Monitoring of strategy execution:– Control of execution (basis: action plans)– Control of outcome (basis: BSC)– Control of premises (basis: assumptions during strategy planning)– Strategic foresight
The roll of Controlling
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
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Success-critical fields of action
▲ Strategy quantification: Financial evaluation of strategies and success potentials (NPV, value of options)
▲ Strategic resource allocation (strategic investment- and de-investment-decisions: Especially design of business portfolios and value chains)
▲ Value-based profit measurement ▲ Company-wide strategic risk management▲ Measurement controlling of strategy implementation▲ Cost/utility-optimization of accounting-, planning-, and management-systems
(reduction of complexity)▲ Improving strategic and financial awareness of responsible management staff
(management development, teambuilding)
Linking financial and strategic values
CONTROLLER_KONGRESS_ZAGREB_DPE.pptx
Seite 48|
Studies about Controlling and CFO Roles1
Strategic Management in the Public Sector 6
Strategic Management 3
Strategy in the Time of Economic Crises4
The Role of Controlling 5
Role and Tools in the Future – Strategic Performance Management
2
Agenda
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Strategic Performance Management ensures that strategies in the public administration are implemented as planned and efficiency and effectiveness objectives met.
What is Strategic Performance Management? What is Outcome oriented management?
BudgetWhat 1-3-year-budget is required to achieve our
goals?
Medium-term planning – What measures do we need to take?
Insufficient link between strategy andoperational execution
StrategyHow do we meet our objectives?
Strategic Performance Management, understood as systematic performance and outcome-oriented management control in the public administration, aims at ensuring that strategies are implemented as planned in order to meet efficiency and effectiveness objectives.Based on Proeller, I. & Siegel, J.P., 2009
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Strategies are planned top-down and are based on the outcome that is to be achieved.
Strategic Focus on Outcome
Outcome Output Processes Input
What outcome do we want to achieve for our stakeholders?
What processes need to be in place in order to produce the planned output?
What output do we need to produce in order to achieve the planned outcome?
What resources do we need in order to guarantee the functioning of the processes in place? (number and qualifications of staff, raw materials, infrastructure)
Outcome Quality Process Quality Structural Quality
Impact(influenced by the organisation and external
factors)
Realisation / Implementation(managed by the organisation itself)
Contributes to Effectiveness(“doing the right things“)
Contributes to Efficiency(“doing things right“)
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Outcome-based objectives need to be defined, which are measured against indicators and achieved through the implementation of measures.
Strategic Focus on Outcome – Objectives, Indicators and Measures
Outcome Output Processes Input
What outcome do we want to achieve for our stakeholders?
What processes need to be in place in order to produce the planned output?
What output do we need to produce in order to achieve the planned outcome?
What resources do we need in order to guarantee the functioning of the processes in place? (number and qualifications of staff, raw materials, infrastructure)
What do we want to achieve?
How are we going to know if we have achieved our objectives?
What do we need to do in order to achieve our objectives?
Objectives
Measures
Indicators
capped
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The second implementation phase of the Austrian Federal Budget Reform includes the introduction of the outcome-orientation principle.
Source: BKA (2013), adapted by Contrast
Outcome-orientation Principle
Dept. / Service Provider
Input Output Outcome
Political ordersOutcome
objectives
Processes
• Personnel• Budget• Materials• Partners
Greater safety in Austrian traffic
Objective:
Lower number of accidents with personal injury in Austria
• Greater volume of traffic• Weather conditions Other
influences
Logic of Outcome-Orientation in Austria
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Different target groups benefit from outcome-orientation.
Source: BKA (2013), adapted by Contrast
Target Groups of Outcome-orientation
Outcome-orientation as an Instrument for Four Target Groups
National CouncilFederal Government
and MinistersPublic
AdministrationThe Public
▲ Are better informed for budget negotiations
▲ Can demand performance based on objectves from ministries and the administration
▲ Has greater transparency over government‘s activities & performance
▲ Benefits from greater efficiency
▲ Increased equal treatment of women and men
▲ Benefit from increased transparency over their activities and performance
▲ Can better justifiy their budget proposal and other policies or decisions
▲ Can work more efficiently
▲ Enjoys greater transparency
▲ Can use performance information and outcome objectives for discussions with stakeholders
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The outcome-orientation principle is strongly linked to other contents of the Budget Reform.
Source: BKA (2013), adapted by Contrast
Interdependencies of Outcome-orientation with Other Instruments
From 2009
Budget structure (Global Budgets)
Estimation and calculation system
Restuls-oriented management control
of the public administration
Outcome-orientation (incl. equal treatment of women and men)
4-year-expenditure limits,
strategy report
Institutional basis
From 2013
Core Contents of the Austrian Federal Budget Reform
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The environment and the organisation have to be analysed first, strategic objectives, measures and indicators derived and implementation monitored.
Strategy Analysis, Planning, Implementation and Monitoring
Strengths and Weaknesses Opportunities and Threats
Environment Organisation
▲ PESTLE Analysis
▲ Stakeholder Analysis
▲ Organisational Analysis
▲ Potential Analysis
▲ Develop strategic objectives (“What do we want to achieve by 20XX?“)▲ Derive measures (“What do we need to do to accomplish our objectives?”)▲ Define indicators (“How do we know if we have accomplished our objectives?”)
Strategy Analysis
Strategy Planning
Strategy Monitoring
▲ Track individual milestones in order to ensure implementation of measures▲ Tack individual indicators in order to guarantee accomplishment of objectives▲ Use performance management system / process
Strategy Implementation
▲ Realise planned measures▲ Establish Integrated Process and Quality Management System
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2
3
4
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